The idea of your organization receiving a windfall may seem like only the stuff of dreams. But stories of nonprofits experiencing unexpected major gifts happen all the time.
When a donor chooses to give their wealth to your organization, will you be ready? Read on for a few simple steps to build or strengthen your gift acceptance policy.
What is a Gift Acceptance Policy?
A gift acceptance policy serves as a transparency tool for your organization to understand which gifts your nonprofit is prepared to warmly accept.
Unusual major gifts like artwork, stocks, acres of land, or antiques may be offered to your nonprofit. Gift acceptance policies protect nonprofits against stressful or awkward situations for donors, like having to turn down gifts that conflict with the nonprofit’s mission or having to negotiate the hidden costs of accepting a complex gift with a donor.
Make sure you can manage the donor relationship with excellent customer service by maintaining a robust and updated gift acceptance policy.
What does a Gift Acceptance Policy Contain?
A useful gift acceptance policy has a few main components to distinguish between gifts you will and won’t accept and the procedure to accept these gifts. These two questions often go hand in hand. What you decide to accept often depends on the feasibility of following through on the procedure to accept the gift.
For example, if you accept gifts of stock, do you have a trusted financial advisor to help you manage it? Or if you decide you will accept gifts of land, are you familiar with the procedure for claiming this gift on taxes?
To help you get an idea of the types of gifts potential donors may choose to give, check out this list from the IRS to help you determine fair market value for in-kind donations. This document is written to explain charitable gifts to donors, but it is helpful to enlighten nonprofits on the burden of legally reporting unusual major gifts, too.
For example, if a donor decides to donate a boat it first will need to be professionally appraised for fair market value. If you decide to accept the gift of a boat, who will be responsible for the appraisal?
Try to be as clear as possible when listing components to your acceptance policy. The nonprofit industry experiences considerable turnover both in its paid leadership and volunteer board of directors. Being specific helps remove doubt as the policy is passed to new interpreters, preserves relationships with donors by offering a board-approved policy instead of a subjective opinion on their gift, and avoids unintended liabilities for the organization.
Update Your Gift Acceptance Policy
Innovation continues at a rapid pace, so frequent policy updates are often needed to stay current. A gift acceptance policy is no different.
Has your nonprofit considered if you will accept cryptocurrency or NFTs as a gift? If you think you would, how would you report these earnings?
There are three triggers to help you maintain an updated gift acceptance policy:
- Establish one Executive Committee or board meeting each year where the policy is reviewed. By building this into your year you have ample opportunities to stay current with your policy and train key staff members on the policy. Refer to the IRS fair market value guidelines document above, as this is an authoritative, frequently updated source.
- Keep your ears open for other trends that may pop up as other potential gifts to your organization. Maybe cryptocurrency isn’t here to stay, but what is the next trend coming our way? Pay attention to sessions at seminars and other continuing education opportunities to stay ahead of the curve.
- Any time you are approached with a new type of in-kind gift you are unsure how to manage, refer to your gift acceptance policy first to see if you can find the answer. If you can’t use your own written policy to serve your major donor, be sure to document this for future updates to the gift acceptance policy. Train other staff members to identify these opportunities to update the policy as well.
Maintaining a detailed and up-to-date gift acceptance policy helps remove doubt about what you are willing to graciously accept as philanthropy to your organization. Effective gift acceptance policies can be easily understood by staff and volunteers, preserve relationships with donors by offering a clear, board-approved solution, and avoid unintended tax liabilities for your organization. A robust gift acceptance policy is an essential, foundational tool for your nonprofit.